By Natalie Wilson
On Monday, September 17, Billy Prim, owner of the Winston-Salem Dash minor league baseball team and founder of both Blue Rhino Corporation and Primo Water Corporation, explained how his passion for entrepreneurship, building companies and creating jobs guided his decisions and journey to success in a presentation titled, “Being an Entrepreneur: The Blue Rhino Story.” The event marked the third in Winston Starts’ SPARK speaker series which features successful entrepreneurs and industry leaders sharing the inspiring stories of their career journeys, the challenges they’ve faced and the lessons they’ve learned.
The odds of a startup company growing to become a public company through an IPO is a staggering 2200 to 1, but both of the companies founded by Prim, who had humble beginnings but strong work ethic and big dreams, achieved this level of success.
Prim grew up in Yadkin county on a tobacco farm, and though he enrolled at NC State University, he left before graduation to support his mother after the deaths of his father and grandfather. Later, through the encouragement and support of mentors, Prim said that he was able to score high enough on the GMAT to be accepted into a graduate program at the Wake Forest School of Business even without an undergraduate degree.
“People underestimate their talents,” Prim said. “People limit themselves. Dream big and go for it.”
Prim defined entrepreneurs both through the financial risk they assume and through their curiosity about the way things are and the problems people have. The concept behind Blue Rhino began with a trip to Europe when Prim was riding in a taxi, and it was his curiosity about something unusual he saw out the window that led him to discover a solution when he wasn’t even yet aware of the problem. While propane tanks in the U.S. had to be dangerously refilled personally by consumers at inconvenient locations, in Europe he discovered that there consumers could conveniently and safely drop off their empty, “ugly” cylinders outside the convenience stores in exchange for new, clean, pre-packaged, refilled ones.
Four companies, Walmart, Sears, Lowes and Home Depot, sold 80 percent of the new gas grills in the U.S. when many people were switching from charcoal to gas in the 80s. Walmart sold hundreds of propane grills a week but didn’t have anywhere to send them to get gas.
When Prim started Blue Rhino, he worked in petroleum distribution which was a commodity business with limited ability to create brand distinction. . He knew that if he were to make a run at the exchange business in the US, he would have to create a strong brand and swiftly leverage first mover advantage. While on a photo safari to Africa, it struck him that the rhino was strong and tough like a tank. He added the blue flame and launched Blue Rhino.
Blue Rhino began in 1994 with 265 locations in the Carolina region and $ 7.6 million in private equity from friends, family and one venture capitalist. By 1996, it had grown to 2,800 locations, and 22 states, and the Blue Rhino propane tank exchange was being introduced to two stores per week across the country.
Prim saw the potential for an explosion of growth over the next year and knew he had to figure out how to distribute fast enough and raise enough capital. He needed to secure his first mover advantage, be available anywhere grills were sold, and outsource Blue Rhino’s “non-core activities,” something he emphasized throughout his presentation. Prim explained that by outsourcing production and distribution, contracting lawyers and consultants rather than hiring them and keeping them in-house and keeping corporate overhead low, they were able to save significant amounts of capital. It was that capital that allowed them to maintain steady growth and scale.
“99% of all ideas are good ideas,” Prim said. “Some of them just run out of gas. If you never run out of gas, you’ll always be in business.”
In May, 1998, Blue Rhino went public with $25 million in revenue, $0 in profit and 2,700,000 shares valued at $13, and by December, 2002, the branded tanks were exchanged in 32,000 locations in all 50 states. Prim said he’d always planned to take his companies public, as he saw this as a key marker of success and a way to have a more diverse set of stockholders who shared his values.
“Being public keeps you honest and keeps you moving that needle every quarter,” Prim said. Then, in 2004 Prim sold his company in a merger with Ferrellgas.
“We had more locations than McDonald’s, Wendy’s and Burger King combined,” Prim said.
After the Blue Rhino board agreed to sell the company to Ferrell Gas, Prim was offered an opportunity to stay with the company as a member of the senior management team, but his entrepreneurial drive took over once again. Prim felt like his purpose was to build businesses and wanted to begin the entrepreneurship process again. He brought six employees with him from Blue Rhino and decided to start another new business from scratch.
In the 80s, large retailers had been selling gas grills without a way to sell propane, and now, the same companies told Prim that they were selling water dispensers and coolers but didn’t have the water. Prim decided that his next venture would be to establish a new Blue Rhino-like program for water.
Now, Primo Water is vended in 45,000 locations and has a $700 million market value.
Overall, Prim defines the keys to success as capital, a great team, learning and adapting quickly, well-timed scaling, focus and “a lot of luck.”